Battle for control of Telecel Zim deepens

The battle for the control of Telecel Zimbabwe by groups of indigenous minority shareholders is turning nasty, while the certainty of the company's operations in Zimbabwe remains unclear as the major shareholder; VimpelCom of Russia is accused of failing to pay $137 million for licence renewal.

Telecel Zimbabwe is the country's second largest telco, with around 2.5 million registered network users. Its mobile money platform, Telecash, has also – according to officials, been doing well in a market dominated by Econet's EcoCash.

The battle for Telecel Zimbabwe's minority stake, which is held by the Empowerment Corporation – a consortium of local business people – erupted after Brainworks Capital said it intended to buy out the EC's shareholding. The government, through ICT Minister, Supa Mandiwanzira, has said that it has cancelled the telco's licence, arguing that it has not yet paid for the licence renewal.

Reliable industry sources have now told ITWeb Africa that the battle for the control of the minority shares in Telecel is now taking political connotations. Some of the local entrepreneurs who make up the Empowerment Corporation are reportedly leaning on government ministers and other influential officials from President Robert Mugabe's ruling Zanu PF party.

"It's not getting any better; people are now positioning themselves for control of the shares and they will use any means possible. We are told that some are now leaning on political heavyweights to wrestle their way in," a source in Zimbabwe's telecommunications industry told ITWeb Africa on Monday evening.

At the center of the battle is exiled businessman, James Makamba, who claims he controls the majority of the Empowerment Corporation's stake as well as Jane Mutasa. Only last week, flamboyant Zimbabwean businessman and Zanu PF member, Philip Chiyangwa, entered the fray, further muddying the battle for the control of EC.

"The shareholding of EC went through various reorganizations during the formative years of Telecel due to the need for EC to raise funding for its contribution to the capital requirements of the project. It is these reorganizations within the shareholding of EC that have formed the unfortunate basis for the current disputes," Makamba said last week on Friday.

The EC holds 40% in Telecel Zimbabwe while the remainder is held by Telecel Globe, a unit majority controlled by VimpelCom. The EC, say executives was formed to spearhead the empowerment of local businessman and is fronted by Makamba as its chairman.

The government has now reportedly taken a keen interest in the internal fights among local shareholders in the telecoms group. Although Mandiwanzira was not immediately available for comment, sources at the ICT Ministry told ITWeb Africa recently that an ultimatum would be issued for the shareholders to put their house in order.

Uncertainty over the future

Telecel has also not yet paid in full the $137 million licence renewal fee. The government feels that the company has reneged on its obligation after it was allowed to continue operations and pay the full amount for licence renewal later.

Amid all the bickering by the local shareholders, pressure is also mounting for VimpelCom to make a firm decision on its interest in Zimbabwe. There are unconfirmed reports that the Russian telecoms group is mulling to dispose of its Zimbabwean stake.

The local shareholders, without an international partner, would be unable to raise money needed for licence renewal and this is why the government is taking a seemingly softer approach in penalising or cancelling the telco's operations for failing to renew its licence, a source privy to the developments said last week.

Chiyangwa, a founding shareholder of the group, was on Monday quoted by local media saying a reconstitution of Telecel Zimbabwe's shareholding structure is urgently needed. "What should be happening is reconstitution of the shareholding of the foreign partner who has failed to pay for licence renewal," he said.

Mutasa is disputing moves to sell the EC's shareholding to Brainworks, an investment company, saying if any member of the EC wants to dispose of their stake they should give right of refusal to fellow EC shareholders. "Someone is playing games and it's not fair. It's not in the best interests of indigenisation," she said.

Makamba however, said the "shareholding dispute has also affected recent attempts to sell (the) Telecel shares held by the foreign partner and rationalise long outstanding indigenisation issues which have lead the government to threaten to withdraw the company's licensing agreement".